Freeport announces force majeure at Grasberg mine in Indonesia

Indonesia’s largest copper and gold mine has declared force majeure following a catastrophic mud rush incident that has significantly disrupted operations and claimed multiple lives.

Freeport-McMoRan announced the declaration at its Grasberg block cave mine after approximately 800,000 tonnes of wet material surged into the mine on September 8. The incident affected multiple mining levels and critical service areas, causing extensive infrastructure damage to mobile equipment, rail systems, and electrical installations.

The disaster has resulted in two confirmed fatalities as of September 20, with search and recovery operations continuing for five additional missing workers. Freeport temporarily suspended all operations at the site on September 9 to prioritize rescue efforts.

“We are grieving for our coworkers lost in this tragic incident and extend our sincere condolences to the families who lost loved ones and who remain missing,” said Freeport board chairman Richard Adkerson and president and CEO Kathleen Quirk in a joint statement. They noted that company leadership had visited the site to support affected families and acknowledge the emergency response team’s efforts.

The disruption at Grasberg carries significant implications for global copper and gold supplies. The mine represents approximately half of Freeport’s proven and probable reserves and was projected to contribute 70% of the company’s copper and gold output through 2029. Indonesia ranks among the world’s top copper-producing nations, with Grasberg being its flagship mining operation.

Freeport has launched a comprehensive investigation into the incident’s cause, enlisting external experts to assist. The investigation is expected to conclude by the end of 2025, though preliminary recovery operations are already underway.

The company is now substantially revising its production forecasts, with initial assessments indicating significant delays in output resumption. The mining giant does not anticipate returning to pre-incident production levels until 2027, creating potential supply constraints in global metals markets over the coming years.

Recovery operations will follow a phased approach, with unaffected sections of the mine potentially restarting by late 2025. The critical Grasberg block cave is expected to begin gradual ramp-up in early 2026, though production for that year is projected to be 35% below previous estimates.

The force majeure declaration allows Freeport to notify commercial partners of its inability to fulfill contractual obligations due to circumstances beyond its control. This legal protection is significant for a producer of Freeport’s scale, as it helps shield the company from potential breach of contract claims during the recovery period.

Freeport has indicated it will pursue insurance recovery for damages, though this will be subject to policy limits and deductibles. The financial impact of the incident remains under assessment, but analysts expect it could significantly affect the company’s earnings projections through 2027.

The Grasberg incident comes at a challenging time for global copper markets, which have experienced price volatility amid shifting demand forecasts and supply chain concerns. Copper, essential for electrical applications and renewable energy infrastructure, remains a critical material for global energy transition efforts.

Mining safety experts note that mud rush events, though rare at large-scale operations with modern safety systems, represent one of the most dangerous hazards in underground mining. Such incidents typically prompt industry-wide safety reviews and potential regulatory responses.

Indonesian authorities are expected to conduct their own investigation into the incident, which represents one of the country’s most significant mining disasters in recent years.